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KPMG calls for investment in the north after new report finds £34bn ‘economic potential gap’

KPMG LLP | KPMG LLP

3 min read Partner content

KPMG is calling for £50 billion of government capital to be spent on northern transport infrastructure, after new research identified a significant ‘economic potential gap’.

The new report by IPPR North - Rhetoric to Reality: a business agenda for the Northern Powerhouse – which was supported by KPMG, found that there was an ‘economic potential gap’ in the north of at least £34 billion.

This represents the economic boost that would be generated if the north just halved the gap between its economic output per head versus the national average.

Investment in transport infrastructure across the north of England, to the tune of £50 billion, is called for in the report, to create the connectivity necessary to achieve this step change in prosperity.

KPMG’s North region chairman, Chris Hearld, said “Underinvestment in transport connectivity is preventing the north from behaving as a single economy and developing the strengths of similar metro-regions internationally. Separate cities and regions simply cannot achieve the economic scale and weight for competing strongly in a global economy.

“Worryingly, a long-term pattern of low investment levels relative to other parts of the UK looks set to continue. The national infrastructure pipeline shows the route for most transport spending is set to bypass the north unless spending decisions are changed.”

The report also states that for the north to match London in terms of per-capita transport infrastructure spending, an extra £33 billion would have to be allocated to the north.

If per-capita spending in the north had equalled the UK regions’ average over the past five years then an additional £2.5 billion would have been spent, according to the research.

Richard Threlfall, KPMG’s UK head of Infrastructure, Building & Construction, added:

“The north has huge potential; it should be in the premier league of world economies but is currently condemned to mediocrity because of lack of investment. The poor connectivity within and between our northern cities is throttling our productivity, and weak national and global links are restricting our trade.

“Today’s report shows, for example, that there are 40 per cent fewer commuter journeys between Leeds and Manchester than there should be, given their physical proximity. Our unemployment rate is higher than the national average, and our skills base is weaker. All these things are linked.

“We need a massive increase in public investment in the region, to trigger a virtuous cycle of increased business confidence, private investment, more jobs and a more productive workforce.

“I urge the Government, in the forthcoming Spending Review and beyond, to heed the call in this report to turn rhetoric into reality and commit to a capital investment programme of up to £50 billion, to set the north on the path to prosperity.”

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